Government responds to Taylor Review

A shake up of employment rights and their enforcement as regards gig economy and agency workers has been promised by the government.

In a bullish response, the government claims it has 'accepted' all but one of Matthew Taylor’s 53 recommendations in his Good Work Review and all but one of the recommendations of the joint Work and Pensions and Business, Energy and Industrial Strategy Select Committee’s report, A Framework for Modern Employment. However, much of this is subject to further consultation on enforcement of employment rights, agency workers, measures to increase transparency in the UK labour market and employment status.

The full response can be accessed here. The government has also published separate research into the gig economy and the use of the Swedish Derogation (pay between contracts for agency workers).

The government press release says that the following actions are planned:

  • enforcing vulnerable workers’ holiday and sick pay
  • day-one rights including holiday and sick pay entitlements and a new right to a payslip for all workers
  • a right for all workers to request a ‘more stable contract’
  • ensuring unpaid interns are not doing the job of a worker
  • introducing a new naming scheme for employers who fail to pay employment tribunal awards
  • quadrupling employment tribunal fines for employers showing malice, spite or gross oversight to £20,000 and considering increasing penalties for employers who have previously lost similar cases
  • providing all agency workers with a clear breakdown of who pays them, and any costs or charges deducted from their wages
  • asking the Low Pay Commission to consider the impact of higher minimum wage rates for workers on zero-hour contracts
  • considering repealing laws allowing agencies to employ workers on cheaper rates
  • defining ‘working time’ for flexible workers who find jobs through apps or online so they know when they should be being paid
  • launching a task force with business to promote awareness and take-up of the right to request flexible working
  • making sure new and expectant mothers know their workplace rights and raising awareness amongst employers of their obligations
  • a new campaign to encourage more working parents to share childcare through Shared Parental Leave

As to time frames for concrete action/implementation of these proposals, the consultations run until May/June. The government will then have to consider the responses and bring forward their finalised plans. So it's probably unlikely that any of the 'big ticket' proposals (e.g. clarification of employment status) will make it into law during 2017.

What are the HR issues?

Our MD, Beverley Sunderland, comments that until the outcomes of the consultations are known it is difficult to predict if any changes will be made to protect those in the gig economy, but there are certainly some areas that HR needs to have on their radar now.

The good news is that there are no immediate changes to grapple with, but there are plenty of opportunities for HR to input their experience and views into the proposals that the government is accepting. There are some changes that will affect HR directly, such as a possible requirement to provide a statement of terms and conditions for both employees and workers on day one, which must include the duration of the employment and the conditions of probation, their notice period, any entitlement to sick pay and holiday pay, and all remuneration and other types of paid leave available to them.

What the proposal does not say, despite the headlines, is that workers will now be entitled to statutory sick pay. The government intends to work towards improving the rights of vulnerable workers but with no immediate plans to make changes.

Another proposal is that a break in service of one month (rather than the current one week) is permitted without breaking continuity of service. This will be a change that HR will need to be aware of if it comes into effect.

Taking the biggest issue, which is the protection of workers in the gig economy, the government accepts the Taylor Review's recommendation of ‘rebadging’ worker status as ‘dependent contractors’ and it seeks the views of business as to whether the law should define the categories of employer, dependent contractor and self-employed more clearly to make it easier for businesses and individuals to correctly identify the status of those working for them.

This could be through writing into the law criteria based on existing tests derived from case law: mutuality of obligation, control, and personal service. Or moving to a completely different basis. They give examples such as length of service – which determines employment status in Greece and the Netherlands – the percentage amount of income earned from one employer, or a test based on where the work is carried out, which is used in the US.

The government is also considering whether tax liabilities should depend on employee status. At the moment, a worker can be an employee for tax purposes but not for employment rights and this causes a great deal of confusion.

Another proposal that will have an impact on HR is changing the pay reference period for holiday pay from 12 to 52 weeks, which will certainly help with calculating holiday for those who are atypical workers with no fixed hours. It has asked for views of better ways for atypical workers to receive holiday – since ‘rolled up’ holiday was outlawed by the EU, businesses have grappled with how to adequately compensate atypical workers for holidays.

Finally, of note is the right for those on zero-hour contracts to request a contract with fixed hours. If this is accepted after consultation, then the key will be whether an employer can just say no – in which case it is likely to be another piece of unhelpful legislation that is easy to overcome.